OTTAWA—A lawyer representing Sen. Mac Harb said there was nothing wrong with borrowing money from an Ottawa businessman to help cover legal costs and reimburse living expenses he billed to the Senate.

Land registry documents show Harb used four of his properties to secure a total of $230,000 in loans from a numbered company owned by Ottawa lawyer and businessman Brian Karam, who also owns a hotel that has done business with the federal government.

Paul Champ, one of the lawyers representing Harb, who left the Liberal caucus in May, said Thursday the loans were above board.

“Senator Harb needed money to pay back the demand for expenses from the Senate and also . . . to fund his legal battle in contesting or disputing the demand for repayment,” Champ said in an interview.

In a letter to the Star, Champ also said it was unfair to suggest wrongdoing.

“To suggest that Senator Harb could somehow influence commercial leasing decisions by the Harper government is absurd,” wrote Champ.

“Senator Harb’s loans with Mr. Karam’s corporation were completely transparent, were promptly reported to the Senate in accordance with Senate rules, and were on reasonable commercial terms that are set out in the publicly registered mortgage documents. There was no advantage or benefit of any kind associated with the loans, and they are being repaid with interest,” Champ wrote in the letter emailed Thursday.

“It is fair to report and comment on the fact that Senator Harb is mortgaging his properties to fight the disputed Senate expense claims. But it was irresponsible and grossly unfair to suggest or impute criminality on Senator Harb for doing so,” Champ wrote.

The properties include three condominium units in Ottawa and the all-season home in Westmeath, Ont. that the Senate has accused Harb of improperly declaring as his primary residence in order to receive a living allowance of up to $22,000 per year for his time spent near Parliament Hill.

Harb, whose expense claims are being investigated by the RCMP, disclosed he had borrowed money from the numbered company 1202864 Ontario Ltd., owned solely by Karam, in an update to his disclosure statement to the Senate ethics officer on June 12, where he was not required to specify the amount.

The land registry documents show Harb borrowed $55,000 from the company and secured it against the condominium unit in Ottawa he had declared as his secondary residence. The terms of the loan state the monthly payments are $3,300, with an interest rate of five per cent.

Two other units Harb owns in the same building were used to secure two $45,000 loans from the same numbered company, with the terms setting out monthly payments of $2,700 and a six-per-cent interest rate.

Karam’s company provided Harb with a fourth loan, worth $85,000, against the home in Westmeath, which property records show Harb sold Thursday for $335,000. The monthly payments for that loan are $5,100 and the interest rate is six per cent per annum.

All loans were signed May 17 and the balance for each of them is due in May 2016.

In an email to the Star, Karam defended his decision to loan Harb the money.

“The terms of such loan to Mac Harb are fully set out in the registered mortgages. Such terms involve no benefit or advantage to Mac Harb and are very similar to terms I have provided to others during the past year,” Karam wrote in his email, adding he has known Harb for more than 25 years.

Karam also said the loans had nothing to do with another one of his numbered companies, 595799 Ontario Ltd., which operates as The Business Inn, a suite hotel in downtown Ottawa that serves clients who stay in the city for extended periods of time.

“Like all other hotels in Ottawa, The Business Inn has a fixed price standing offer, established annually on a competitive basis. Federal government employees make their decision to stay with The Business Inn or to stay elsewhere, on a comparative basis, just as they would in relation to any other hotel in Ottawa,” Karam wrote in his email.

Government contract records available online show that standing offer has been set at $1.87 million annually since 2009.

Karam did not respond to a request for an interview Thursday.

Rob Walsh, retired House of Commons law clerk, said there are no issues with Harb’s loans under the Criminal Code’s section on “frauds on the government,” which makes it illegal for an “official” to accept a benefit from “a person who has dealings with the government” without written permission from the head of their branch of government.

Walsh said that would not apply to Harb. “A senator is not an official of the government or any branch of government,” said Walsh, who is not involved in the ongoing Senate spending controversy.

“The Senate and the House of Commons are not part of government . . . there’s no connection to government,” said Walsh.

With files from Bruce Campion-Smith

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